Brownbag: “Serving the Base of the Pyramid through Innovative Business Models and Stakeholder relationships: A Local Social Entrepreneurship Approach”




To overcome the institutional voids that characterize the base of the pyramid (BoP), local social entrepreneurship can be an effective approach to creating both economic and social value through innovative business models and relationships with different stakeholders. BoP refers to the global poor, most of whom live in developing countries on less than $2 a day and face limited access to health care, education, and public services. In this context, local social entrepreneur refers to a person whose enterprise simultaneously pursues both social and economic goals—through an enterprise grounded in addressing the community’s needs and potentiating its capabilities. We develop a set of propositions on the features that effective social enterprises serving the rural BoP are likely to exhibit, based on insights from three social enterprises in Latin America, as well as on previous research. Those features include: a) address a problem identified by a local entrepreneur who understands the needs of the communities; b) overcome the BoP’s institutional voids through innovative business models; c) rely on or developing local capabilities; and d) cross-subsidize their BoP operations by diversifying to other market segments or product lines.